Over the past few weeks, Education Minister Christopher Pyne has loudly hinted at major reforms to Australia's higher education system. Government funding is likely to be extended beyond the public universities, and current limits on student charges increased or abolished. Over time, this would lead to a more diverse and competitive system, but on average, a more expensive one too.

With the government looking for budget savings, higher education was never going to escape scrutiny. Spending on higher education had increased significantly in recent years, mainly due to the removal of most restrictions on bachelor degree student numbers in public universities.

With David Kemp, I was appointed by the government to review this "demand-driven system". We recommended extending the system to cover sub-bachelor qualifications, such as diplomas and associate degrees, and broadening it to encompass private universities and non-university higher education providers. These include specialist vocational or professional colleges, TAFEs offering degrees, and "pathway" colleges, which offer diploma courses that lead into bachelor degree programs at public universities. There are already about 130 non-university higher education providers.

Advertisement

Pyne has responded positively to this suggestion. Especially the TAFEs and pathway colleges meet the needs of a much wider group of people now seeking higher education. Compared to public universities, they offer intensive teaching methods and a more personalised environment.

Students who arrive at university via a pathway college do much better than would otherwise have been expected, given their prior school results. Some universities require students with weaker Year 12 results to attend a TAFE or pathway college before they are admitted. Although the academic outcomes are good, in private colleges students have to pay fees that are often $5000 to $10,000 more than they would pay at a public university.

Fourteen per cent of these undergraduate full-fee students are from low socioeconomic backgrounds, compared with 17 per cent of government-supported students in public universities. Most full-fee students borrow under the Higher Education Loan Program, a HECS-like program known as FEE-HELP. Under what the government now seems to be proposing, many of these students would pay much less than they do now. However, it is likely that students at public universities would pay more to finance extending the public funding system.

This reform and other financial savings mean higher student charges from the 2014 budget. The government now seems to have decided to go further. In a speech given at Monash University yesterday, Pyne talked about giving "universities and colleges greater control over their budgets". Rather than just getting private money to replace public money, universities and other higher education providers will be allowed to set higher fees and keep the money.

Possibly, the government's political calculation is that any increases in student charges will lead to Q&A-style protests. If they are going to spend their political capital, they might as well get major higher education reforms as well as a budget saving.

There are clear attractions in a more diverse and better-funded higher education system. One attraction, according to Pyne, is that it would allow more universities to compete with the world's best, which typically have much higher revenues per student than any of Australia's universities. Vice-chancellors of our leading research universities have publicly supported this idea. But of course there are also objections to such a change.

One concern is that students from disadvantaged backgrounds will be disproportionately affected. Despite the intuitive logic behind this concern, historical experience suggests that prospective students from low socioeconomic backgrounds are not generally put off by higher charges if income contingent loans are available. They make similar decisions to other prospective students about the costs and benefits of their realistic alternatives. Pyne has made it clear that FEE-HELP would be retained, although possibly modified.

Pyne's broader package of reforms directly targets a bigger problem for prospective students from disadvantaged backgrounds. Unfortunately, their school results are heavily skewed towards lower Australian Tertiary Admission Ranks (ATARs). Students directly entering a bachelor degree at a public university with an ATAR below 60 have only a 50 per cent chance of completing the degree within six years. Pathway colleges are important for improving their prospects and a necessary part of widening access to higher education.

Senate approval of these reforms is far from assured. Clive Palmer has indicated support for free education. Labor and the Greens are sceptical of higher student charges and private colleges. But these policy positions have contradictions Pyne will be able to exploit. Letting private colleges into the system would reduce fees for many students. Even if the broader fees agenda is postponed to another political time, there may be a Senate majority for opening up the system to all higher education providers.

Andrew Norton is the higher education program director at the Grattan Institute and was co-author, with David Kemp, of the Review of the Demand Driven System: Final Report.

70 comments

Let us compare the vision for higher education today with that of a three decades ago. Back in 1983 said in his election speech:

"No longer content to be just the lucky country, Australia must become the clever country.

To realise that vision I am announcing bold new initiatives today to build on our substantial achievements in education and scientific research – to unleash the skills and talents of our people.

...

In this national task of mobilising our human resources, our scientists and researchers stand at the forefront.

Australia must reduce its reliance on imported technology and borrowed research.

We must become a leader in the production and export of ideas.

...The Government has now decided to establish a network of fifty world class Cooperative Research Centres. These research centres will create additional jobs for about 1,000 talented Australian scientists.

They will be established over the next five years, built around outstanding research leaders and pooling the talent of outstanding research groups not only from the CSIRO, other government research organisations and the universities, but also from private industry."

By contrast, today we have a proposal to introduce fees competition and private higher education. How will this drive up quality, which is supposed to be the problem? Look at any global league tables of universities. UK universities, for example, which survived even Mrs Thatcher's budget razor, fare much better than ours, year after year. They do because research there is valued and because for the last 20 years funding is based on the competitive assessment of research quality

Is it too much to ask for some vision for Australian higher education, other than to be just another plank added to the construction of Tony Abbott's two tier society?

Commenter

Juan Term

Date and time

May 09, 2014, 2:07AM

One wonders why they just don't do the intelligent thing and scrap funding for bogus courses like an Arts degree in Modern Dance etc. Uni's are just propping up their balance sheets by offering such drivel to students who, once completing said courses, have an incredibly low probability of ever earning enough to pay back their HECS debt.

Commenter

Gilly

Location

Melbourne

Date and time

May 09, 2014, 6:55AM

Yes, the main worry is we could end up like the US where one's parents need to be very wealthy in order to receive a university education (or proper health care for that matter)

Commenter

Good Logic

Date and time

May 09, 2014, 7:07AM

Oops, I left out "Bob Hawke" of course. But the Pyne proposals are about ideologically-drivenerosion of the public sector and the replacement of universities with a degree market, shaped by private companies.

Why all this neocon garbage from the USA?! Is there nothing to learn from nations that run trade surpluses, for example?

Commenter

Juan Term

Date and time

May 09, 2014, 7:47AM

As much as anything, the back to front way this Govt is going about what it wishes to do is appalling. How about discussion and broad input from all concerned before making such sweeping changes? A conversation and informed argument prior to policy implementation is always better than these nasty surprises, nasty surprises that are becoming a hallmark of this hapless, utterly hypocritical government of juveniles.

It will probably do exactly the opposite.....after all if I owned a uni I could think of all the dodgy things i would like to shove at the gullible googly eyed faces staring back at me from the pulpit.

I could teach in econmics that it's very important to give most of the money in society to the deserving rich(while they sit in their ivory tower), so that they money trickles slowly down to the grovelling hungry poor, who should work for less and less each year.....this would be very important for future pollies.

I would teach that you must pay for every bit of education, and healthcare etc you recieve, because the owners of the banks deserve the money you pay in interest to them from very large loans.....

Heck...I would probably teach why do we need govs at all...why not just be ruled by banks???

Commenter

Milton

Date and time

May 09, 2014, 12:46PM

@ man cuddlesThis is what I mean about education. "bogus" is not related to "Bogan".

Commenter

Gilly

Location

Melbourne

Date and time

May 09, 2014, 1:16PM

Is there any coincidence that at times when we are hammered by cost of living increases and rising unemployment that governments choose simultaneously to make prohibitive the cost of retraining and educating.